The bank guarantee introduced in 2008 was "too generous" to bondholders, and played a major part in turning a financial crisis into a sovereign debt crisis, the European Commission has admitted in a new report.
The guarantee was based on a "misunderstanding" of the problem in the banks, which were seen at the time as liquidity and confidence issues, instead of recognising more fundamental problems, according to the report.
Brian Cowen was taoiseach on the night of September 29, 2008, when it was decided that a blanket guarantee for all of the banks would be taken.
The now-deceased Brian Lenihan was finance minister.
However, Mr Cowen has essentially denied "overruling" Mr Lenihan on the night of the guarantee over the best route to take.
He told the banking inquiry recently that Mr Lenihan wanted to nationalise Anglo Irish Bank and then only extend a bank guarantee to the other banks rather than introduce a blanket guarantee.
The €375bn guarantee was double the size of the Irish economy and, by putting the State on the hook for bank losses, it "eventually turned the banking crisis into a sovereign debt crisis", according to the commission's 171-page evaluation.
"With hindsight, the bank guarantee appears too generous, and the fiscal impact could have probably been limited if banks had been subject to stricter requirements."